BBP Financial Model Update
BBP Financial Model Update Board of Directors October 21, 2013
BACKGROUND BBP required to be financially self‐sustaining
2
EXPENSES: BACKGROUND 2005 Park plan estimated expenses for proposed park Maintenance and operation of 85 acres of waterfront park
Marine infrastructure in various states of deterioration
3
EXPENSES: BACKGROUND Expenses projected to be $16M per year at build‐out Maintenance & operation Operating budget
Management & admin.
$12M / year
State of good repair
Expenses
Maritime repair
$200M over 50 years
$4M / year
4
EXPENSES: UPDATE Operating budget largely in line with projection thus far Open park space
Operating budget
Today
41 acres1
$6.4M
Park build‐out
85 acres2
$12M
- Future park
1. Includes development sites (8 acres) 2. Includes calm water zone (10 acres) and development sites (8 acres)
5
EXPENSES: UPDATE Maritime repair estimates have increased by 25% Projected maritime expenses ($M) $300
• Growth driven by increase in unit cost of pile repair
$250 $200 $150 $100
$200
$250
• Same scope of work • More competitive economic environment
$50 $0 2010 lifecycle assessment
2013 lifecycle assessment
6
REVENUE: BACKGROUND Revenue model created to match projected expenses
Pier 1 Empire Stores
360 Furman
John Street
Pier 6
7
REVENUE: BACKGROUND Revenue model created to match projected expenses • Ground rent Recurring
• PILOT
Changing market circumstances 1
More one‐time, less recurring revenue
2
Lower residential PILOT
3
Higher revenue from Empire Stores
• Permits • Concessions
Revenue
• Up‐front rent One‐time
• PILOST • PILOMRT
8
REVENUE: BACKGROUND Revenue model created to match projected expenses • Ground rent Recurring
• PILOT • Permits
Must meet or exceed $12M annually
• Concessions Revenue
• Up‐front rent One‐time
• PILOST • PILOMRT
• To cover large portion of maritime repair • Remainder covered by recurring revenue
9
REVENUE UPDATE: Four development sites awarded to date One‐time revenue
Recurring revenue Status
Rev. per year ($M)
OBBP
Awarded
$2.4
Pier 1
Awarded
John St.
Status
One‐time rev. ($M)
OBBP
Awarded
$4
$3.3
Pier 1
Awarded
$27
Awarded
$0.9
John St.
Awarded
$25
Empire Stores
Awarded
$2.6
Empire Stores
Awarded
$36
Permits/ concessions
Awarded
$0.9
Permits/ concessions
Awarded
‐
$10.0
SUBTOTAL
$3 ‐ $4
Pier 6
$13 .5
TOTAL
SUBTOTAL Pier 6 TOTAL
Pending
vs. $12M in opex
$1.5M / year
$92 Pending
$70 ‐ $100 $160 ‐ $190
vs. $250M in maritime repair
Maritime repair complete in 40 to 60 years 10
Summary • BBP is constantly refining financial model to reflect latest on‐the‐ground realities and market trends • Current financial projections are in line with originally conceived financial plan; however, uncertainty exists associated with: o
Future M&O expenses associated with unopened park sections
o
PILOT revenues from development sites
o
Maritime repair expenses over life of the Park
o
Strength of residential real estate market
11
BACKGROUND BBP required to be financially self‐sustaining
2
EXPENSES: BACKGROUND 2005 Park plan estimated expenses for proposed park Maintenance and operation of 85 acres of waterfront park
Marine infrastructure in various states of deterioration
3
EXPENSES: BACKGROUND Expenses projected to be $16M per year at build‐out Maintenance & operation Operating budget
Management & admin.
$12M / year
State of good repair
Expenses
Maritime repair
$200M over 50 years
$4M / year
4
EXPENSES: UPDATE Operating budget largely in line with projection thus far Open park space
Operating budget
Today
41 acres1
$6.4M
Park build‐out
85 acres2
$12M
- Future park
1. Includes development sites (8 acres) 2. Includes calm water zone (10 acres) and development sites (8 acres)
5
EXPENSES: UPDATE Maritime repair estimates have increased by 25% Projected maritime expenses ($M) $300
• Growth driven by increase in unit cost of pile repair
$250 $200 $150 $100
$200
$250
• Same scope of work • More competitive economic environment
$50 $0 2010 lifecycle assessment
2013 lifecycle assessment
6
REVENUE: BACKGROUND Revenue model created to match projected expenses
Pier 1 Empire Stores
360 Furman
John Street
Pier 6
7
REVENUE: BACKGROUND Revenue model created to match projected expenses • Ground rent Recurring
• PILOT
Changing market circumstances 1
More one‐time, less recurring revenue
2
Lower residential PILOT
3
Higher revenue from Empire Stores
• Permits • Concessions
Revenue
• Up‐front rent One‐time
• PILOST • PILOMRT
8
REVENUE: BACKGROUND Revenue model created to match projected expenses • Ground rent Recurring
• PILOT • Permits
Must meet or exceed $12M annually
• Concessions Revenue
• Up‐front rent One‐time
• PILOST • PILOMRT
• To cover large portion of maritime repair • Remainder covered by recurring revenue
9
REVENUE UPDATE: Four development sites awarded to date One‐time revenue
Recurring revenue Status
Rev. per year ($M)
OBBP
Awarded
$2.4
Pier 1
Awarded
John St.
Status
One‐time rev. ($M)
OBBP
Awarded
$4
$3.3
Pier 1
Awarded
$27
Awarded
$0.9
John St.
Awarded
$25
Empire Stores
Awarded
$2.6
Empire Stores
Awarded
$36
Permits/ concessions
Awarded
$0.9
Permits/ concessions
Awarded
‐
$10.0
SUBTOTAL
$3 ‐ $4
Pier 6
$13 .5
TOTAL
SUBTOTAL Pier 6 TOTAL
Pending
vs. $12M in opex
$1.5M / year
$92 Pending
$70 ‐ $100 $160 ‐ $190
vs. $250M in maritime repair
Maritime repair complete in 40 to 60 years 10
Summary • BBP is constantly refining financial model to reflect latest on‐the‐ground realities and market trends • Current financial projections are in line with originally conceived financial plan; however, uncertainty exists associated with: o
Future M&O expenses associated with unopened park sections
o
PILOT revenues from development sites
o
Maritime repair expenses over life of the Park
o
Strength of residential real estate market
11
